how to consolidate student loans
how to consolidate student loans

Are you overwhelmed with your monthly student loan payments? Do you want to learn how to consolidate student loans into one payment? Are you hesitant about even applying for consolidation because it sounds like a big and daunting task?

If this sounds like you, there is no need to worry. There are several thousands of other students and recent graduates who resonate with how you feel. In fact, about 42.9 million Americans have student loan debt that they need to consolidate or refinance.

If you want to learn more about consolidating your student loans, you will want to check out this article. We will go over the steps you need to take to consolidate your loan and what information you need before applying. 

What Is Loan Consolidation?

When you consolidate your loans, you combine all your student loans into one loan. A consolidation loan is a good idea if you are currently struggling with keeping up with your student loan payments. With your student loans consolidated into one loan, you only need to make one single monthly payment instead of multiple different payments. 

Pros of Consolidating Student Loans

If you currently have federal student loans serviced by different lenders, you may benefit from consolidating your loan into one payment. When you consolidate your loan, you can lower your monthly payment.

Student loan consolidations provide you with a longer period of time to repay your loan. You have up to 30 years to repay your loans, depending on your loan provider. 

There are many different income-driven repayment plan options or forgiveness programs available to you as well. When you consolidate your loans, you make yourself eligible for those loan forgiveness or repayment plan programs. 

Cons of Consolidating Student Loans

Although there are many great benefits associated with consolidating your loans, there are a few cons you will want to review. Consolidating your loans may help you extend the time you have to repay them, but that comes with a cost. When you consolidate your loans, you extend your payments which extends your interest payments as well. 

Consolidation may cause you to lose certain benefits, such as principal rebates. You also may lose out on interest rate discounts and some loan cancellation benefits. These benefits are only associated with your current loan. 

Should I Consolidate My Student Loans?

The answer to that question depends on your current situation. Based on the pros and cons listed above, you will need to make your own decision to consolidate if it serves you well.

How to Consolidate Student Loans

If you recently graduated, dropped below half-time enrollment status, or left your institution, you are eligible to consolidate your student loans. There are no credit requirements for federal student loan consolidation, but you must meet a few requirements. 

Student Loan Repayment Status

The loans you want to consolidate must already be in their grace period or a repayment period. This period lasts about six months when you graduate, leave, or drop below half-time enrollment. 

No Previous Consolidations

To qualify for federal student loan consolidation, you cannot already consolidate your loans. If you do, you can only consolidate again if you include a new existing student loan. 

Default Status

The loans you wish to consolidate must not be in default. You can consolidate a defaulted loan only if you make three consecutive payments on it before consolidation. 

If your defaulted loan is receiving payment through wage garnishment, you cannot consolidate that loan. Per your court order, consolidation is not allowed unless you have the garnishment order released or the judgment against you lifted. 

Steps to Consolidating Student Loans

The Federal Financial Aid, or FSA, handles federal loan consolidations. The process to apply for consolidation takes only 30 to 45 minutes to complete.

Once complete, you should expect to hear back within 90 days. You must continue to make payments on your existing loans until you hear back from the FSA. 

Step One: Sign In to Your FSA Account

You can log into your FSA account through their website. You should already have an FSA account as it is a requirement to have an account before applying or receiving financial aid. Once you are in, you will want to navigate over to the “Manage Loans” tab and click on “Consolidate My Loans.” 

Step Two: Gather the Information You Need

Before you even start the process, there are a few documents that you will want to have on hand. Make sure that you have your personal income information, loan record information, two references who have known you for at least three years. If you complete your application online, you will already have access to your federal loan details. 

Step Three: Complete the Application

There are five critical sections that you will need to complete for your consolidation loan application. This application is free, and you have the option to either complete it online or print out a hard copy and send it in. If you want a faster response, it is best to complete the application online. 

Loan and Servicer Section

The first section you will complete is the loan and servicer section. You will need to select which loans you wish to consolidate. Once you choose your loans, you will receive a new calculation for your new consolidation loan.

It will include your interest rate and how much you can expect to pay back each month. In this section, you can also request a grace period and choose your new loan servicer. 

Repayment Section

Your federal student repayment options depend on the type of loans you want to consolidate and your financial status. Depending on your family size, income, and tax status, you will see different estimated monthly payments. Once you select your ideal repayment plan, you will move on to the next section. 

Terms and Conditions

Before you can review and sign your loan, you will need to agree to the terms and conditions of your loan. This portion informs you about the certifications and authorization, your responsibilities as a borrower, and other pertinent information.

It also authorizes the U.S. Department of Education to process your consolidation loan against your federal accounts. When you agree to these terms and conditions, you agree to make your payments on time. 

Personal Information

The application will request your personal information, such as your driver’s license and contact information. If applicable, you will need to input your employer’s information as well.

Ensure that you input your current address and phone number, so the lender knows where and how to reach out to you. In this section, you will need to input the names and contact information for your two references. 

Review and Sign

Once you get to the end of your application, you will need to review all your input information. At this phase, make sure that you check everything input to ensure that everything is correct.

If you need to make any changes to your application, now is the time. Make sure to recheck the terms and conditions to ensure that you understand your responsibilities. If you agree to everything and the application looks good, you can sign and send in your application. 

What Loans Can I Consolidate?

You should be able to consolidate almost all of your federal loans. For example, you can consolidate any subsidized Stafford loans or any PLUS loans. 

Other eligible loans:

  • Nursing student loans
  • Health education assistance loans
  • Supplemental loans
  • Unsub and non-sub Stafford loans
  • Direct sub and unsub loans
  • Health professions loans

If you have any guaranteed student loans or parent loans for undergrad students, the federal government can also consolidate them. It is important to remember that you will need to refinance any private student loans outside of the FSA portal if you have any private student loans. 

When Do I Start Repayment?

Repayment of our federal direct consolidation loan begins 60 days after the disbursement of the loan. Your lenders will let you know when you need to make your first payment. 

Student Loan Refinancing

Consolidating your private loans is also known as student loan refinancing. Refinancing student loans helps to roll your federal and private loans into a new private loan.

If you decide to refinance your student loans, there are a few things you will need to keep in mind. You will want to ensure that you have good or excellent credit and a stable job. Private loan lenders prefer their applicants to have a credit score of 690 or above before they consider you for a new loan. 

If you do not have good credit, you can apply with a co-signer with good to excellent credit. Keep in mind that this lender will still run your credit in addition to your co-signers. 

Although you can consolidate your federal student loans into a private consolidation loan, that does not mean that you need to. When you refinance your federal student loans, you miss out on certain consumer protections allowed with federal student loans. If you have already consolidated your federal loans into a private loan, you cannot transfer the private loan to the federal government. 

Interest Rates for Refinancing

The interest rate you receive for your new loan depends on your income, credit, and how much debt you are in. Your interest rate will most likely be higher than that of a federal direct consolidation loan.

If you are a new graduate, you may not have the best credit if you have not worked on it. You may want to wait sometime after securing employment and establishing your credit history before opting for a private loan. 

Alternatives to Student Loan Consolidation

Loan consolidation is something that works best for some and not so well for others. Others find that refinancing, deferment, or forbearance works best for them. Depending on your situation, you may want to consider one of the options below. 

Deferment Option

If you are in a financial bind and want to hold your student loan payments, you can request a deferment. Deferment allows you to pause your payments for a set amount of time determined by your lender.

If you have a subsidized federal loan, interest will not accrue during this deferment period. If you are back in school, unemployed, or struggling to make your payments, you can reach out to your lender for this option. 


If you do not qualify for deferment, you have the option to go into forbearance. You must apply for forbearance through your lender, and they will review your case for approval.

During this forbearance phase, you will need to pay your interest payments each month. Most lenders allow you to go into forbearance for up to one year. 

Income-Driven Repayment Plan

An income-driven repayment plan, also known as IDR, lets you reduce your monthly payments, so they are more in line with your monthly income. With an income-drive repayment plan, your monthly payments are between 10% to 20% of your income. 

Student Loan Consolidation

Knowing how to consolidate student loans is very important, especially if you are knee-deep in student loan debt. Private loans are a good idea if you have a steady income and a good credit score, whereas federal direct loan consolidation comes with a lower interest rate.

A deferment is also a great option if you want to pause your payments for some time.

Regardless of your current situation, there are ways to make paying your student loans more manageable. If you want to learn more about other essential college tips and tricks, check out our blog now!

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